CACHE — A clerical mistake in the valuation of the Cache School District and a debate between the Goodyear Co. and the Oklahoma Tax Commission over the company’s tax incentives has sent public officials scrambling, raised questions about reduced school funding, school spending projects and the possibility of future property tax increases.
Last week, Cache School Superintendent Chad Hance posted a letter to patrons and staff of the district, which said the school had been notified by county officials that a mistake was made in the district’s net assessed valuation. Hance also said school officials were reevaluating the scope of their middle school project.
County excise boards certify the valuations which set budgets for county schools, health departments, CareerTech centers and county government.
Hance’s letter said a clerical error by the county “inadvertently increased the community’s valuation by $51 million.”
“The county assessor’s office made the mistake in March 2021, but it was not reported to Cache district officials until late June 2022,” Hance wrote. “We have invested the last two weeks in better understanding the unusual situation and determining how this will affect our school district and local taxpayers. Unfortunately, it will have a decidedly negative impact – one that the school board and district officials are unable to correct or control.”
County officials acknowledge the error but said they were unaware of the problem until June and that other issues—including a conflict between the Oklahoma Tax Commission and the Goodyear Co.—were part of the problem, too.
“More than a year passed before the error was caught and brought to our attention on June 22 by Goodyear’s accounting firm,” wrote Comanche County Assessor Grant Edwards in a statement sent late Tuesday evening. “Over the course of that year, there was some communication back and forth between our office and the Oklahoma Tax Commission about removing and reinstating Goodyear’s exemptions, but nothing about the valuation was discussed and we were not aware of the error until a few weeks ago.”
Edwards said the error happened last March. He said Goodyear provided several valuation numbers to his office, and when that data was input into the system, “a clerical error was made that resulted in a decrease of tax revenue of $3,334,588.”
“The rest of the deficit mentioned by Mr. Hance came from three of Goodyear’s exemptions that the Oklahoma Tax Commission did not allow that were unrelated to the clerical error,” he wrote.
Public school districts, such as Cache, and CareerTech districts use anticipated property tax revenue to help finance debt like bond issues. A mistake in the valuation of property within the district would mean the district would not have enough tax revenue to pay off its bond debt. The process is similar to the way the state Board of Equalization provides an estimate of tax revenue that will be available for appropriation by the Oklahoma Legislature.
The problems come at the heels of a $35 million bond package passed by the Cache district in February. That package included two bond deals, one for $35.36 million and one for $1 million. Both bond issues passed with more that 63% of the vote.
Funds from the bond sales are earmarked to expand the middle school by adding four new classrooms, two science labs, a commons area, a seminar room, a library and office space and the school’s classrooms and bathrooms, create a new parking area and add a pick-up/drop-off lane for the fifth/sixth-grade center.
Records show that construction work on the existing middle school has already begun. School officials face an early August deadline, with city of classes set to begin Aug. 15.
Published estimates put the cost of the middle school project at about $15.85 million. In addition, school officials said they planned spent $19.51 million to replace the schools existing fieldhouse.
Proceeds from the second bond issue, a $1 million proposal, will be used to buy new buses for the district.
In early July, Cache school officials held a special board meeting to consider their options following the valuation mistake. Minutes from the meeting show school officials passed on the opportunity to put a hold on the bond issue and, instead, voted 5-0 to split the school building projects.
District officials voted to issue approximately $18.25 million in bonds which translate to about $13.37 million in construction funds.
“The budget for the middle school is $11 million and we could use the excess to pay off a big portion of the LCS debt with those funds,” minutes from the meeting said. “We could refinance the remaining balance with the bank lowering the payment and not have our building funds be in jeopardy. This would keep our millage rate at approximately $40 million if there is no growth or decline in valuation.”
The board also adopted a second option. That option, the minutes said, would leave the district with “approximately $16,845,000 for the new fieldhouse, which we could issue at a later date.”
Records from the special meeting do not indicate if the school board discussed the problems regarding Goodyear’s tax incentives and its effect on district finances.
On July 14, Hance issued a second statement to clarify facts related to the error, he said.
Answering public complaints about the timing of the special meeting, he said the meeting notice was “properly posted and conducted under Oklahoma law.”
The meeting “allowed the school board to provide the administration with guidance about the future bond sale and construction project which will not impact taxpayers until the 2024 tax year,” he said. “The board’s decision during the meeting centered around the district’s original plan to sell $418 million in bonds to fully renovate the district’s middle school.”
Hance said no bonds were sold Monday night. He said no final decisions had been made about the bonds, adding that school officials “are in the process of exploring all of our options.”
“We are reevaluating the scope of the middle school project,” he said. “We are working to determine how we can meet the needs of Cache students and fulfil our obligation to voters who approved the 2022 bond issue while also minimizing the financial impact to local taxpayers.”
Edwards said his office had implemented several new due diligence steps to prevent “anything like this from happening again.”
For his part, Hance apologized to Cache taxpayers for the impact the error would have on them. “I value and want to protect the trust and relationships that our district has built with local residents,” he said. “I’m sorry this situation occurred.”